From Uninsured to Medicare Beneficiary – Who Suffers and Who Pays?

by Marlene Piturro, PhD, MBA

Like other physicians, Gady Har-El, MD, Chairman of the Department of Otolaryngology-Head and Neck Surgery at Lenox Hill Hospital in New York and president of the American Broncho-Esophagological Association, takes on uninsured patients who have waited too long to see a doctor. I see people who are suffering from late-stage cancer, complicated comorbidities from smoking, and uncontrolled diabetes. With older patients, delays in treatment can be especially serious, he said.

For uninsured middle-aged Americans-those between ages 50 and 64-with chronic illnesses, the wait to receive Medicare at age 65 may be laden with nonreimbursable bills for doctor visits and hospitalizations. A recent New England Journal of Medicine article attempted to quantify just how much waiting for insurance costs a vulnerable population (Williams J, Meara E, et al. Use of health services by previously uninsured Medicare beneficiaries. NEJM 2007;357:143-53).

The authors collected longitudinal data between 1992 and 2004 on 5158 adults who were either privately insured continuously for five out of the six years immediately preceding their Medicare eligibility or uninsured before Medicare coverage began at age 65. They hypothesized that previously uninsured adults with chronic conditions who start receiving Medicare at age 65 have greater morbidity and require more intense and costlier care over subsequent years than they would if they had been insured previously.

Study participants self-reported their use of doctor visits, hospitalizations, and medical costs. Among 2951 adults with hypertension, diabetes, heart disease, or stroke diagnosed before age 65 years, previously uninsured adults who acquired Medicare coverage at age 65 stated they had 13% more doctor visits and 20% more hospitalizations than their continuously insured peers. The authors also suggest that the cost of subsidizing health insurance for the target group might be partially offset by future cost savings.

Although the study has drawn significant attention from advocates for the uninsured, it has flaws. Data on doctor visits, hospitalizations, and medical costs were self-reported rather than independently validated. Discrepancies between the percentages of insured and uninsured study participants who engaged in certain behaviors, glossed over by the authors, deserve a closer look (see Table 1).

Joel Levine, MD, Chairman of the American College of Physicians’ Board of Regents and Professor of Medicine at the University of Colorado School of Medicine, said of the research: The study isn’t rocket science, but it shows that not having insurance reduces the number of services patients get. When they have insurance they use it. He also points out that people without a primary care physician are missing more than medical care. They don’t have the social system and cultural context to interpret how their behaviors such as smoking and alcohol impact their health. They enter the health system in the most inept and costly way, via the emergency room. And ERs don’t know what other ERs are doing, so the patient ends up with seven CT scans from visits to different ERs. In contrast, having a relationship with a physician helps patients realize that somebody cares and that they’re not excluded from the health care system, said Dr. Levine.

The relationship between visiting a doctor and having insurance may also be subtler than the study suggests (see Table 2).

In contrast to the NEJM study’s authors, Dr. Levine believes that the cost of having insurance would not be offset by savings down the road. It’s all about the laws of supply and demand, he said. There’s a big jump in usage [at age 65] for both groups. It’s as if you were on a restricted diet and suddenly someone said you could eat as much as you want. There’s pent-up demand, and the uninsured will consume health care services when they get insurance. Suddenly, they can see lots of doctors-and they will. By implication, insuring more people without adding a more coherent delivery system will only drive up cost.

Matthew Narrett, MD, Catonsville, MD-based Erickson Retirement Communities Senior Vice President and Chief Medical Officer, added, Once a $100 office visit becomes available at an 80 percent discount through insurance for a $20 copay, people visit the doctor a lot more than if they were paying what it actually cost.

Erickson Retirement Communities, with 50 physicians and 20 nurse practitioners on 18 campuses and with its own Medicare Advantage plan, has a model that balances supply and demand for services for Medicare beneficiaries. For example, Erickson physicians routinely see many ENT conditions. Chronic sinus infection, bronchitis, hoarseness, throat polyps, tinnitus, and vertigo are treated in our on-site offices. Conditions that are untreated and allowed to worsen require surgery and other expensive intervention. It’s true that an ounce of prevention is worth a pound of cure, said Dr. Narrett.

Through its HMO model Erickson has reduced hospital and nursing home length of stay by 35% and 50%, respectively. Aligning its incentives, Erickson patients get 50% to 100% more office visits than average Medicare beneficiaries, using prevention to help ward off negative outcomes.

How to Pay?

Adding 30 million or so 50-to-64-year-olds to the Medicare rolls, as the NEJM study suggests, would sink an already distressed system. The trustees of the Social Security and Medicare trust funds state in their 2007 annual report (www.ssa.gov/OACT/TRSUM ) that the financial condition of the Social Security and Medicare programs remains problematic; we believe their currently projected long run growth rates are not sustainable under current financing arrangements.…Medicare’s Hospital Insurance (HI) Trust is already expected to pay out more in hospital benefits this year than it receives in taxes and other dedicated revenues. The trustees issued a ‘Medicare funding warning’ for the first time in 2007, saying, The longer we wait to address these challenges, the more limited will be the options available, the greater will be the required adjustments, and the more severe the potential for detrimental economic impact on our nation.

Covering more people would necessitate a more coherent delivery system. Dr. Narrett commented that Medicare’s current reimbursement environment makes it nearly impossible to manage costs and quality because Medicare finances, rather than organizes, care. David Knowlton, MA, New Jersey’s former deputy health commissioner and currently the president of HealthWell Foundation, a charity that contributes more than $7 million each month to help uninsured and underinsured patients pay for prescription drugs, puts the issue starkly: Head and neck cancer is a priority for us, as are rheumatoid arthritis and other cancers. If you have a serious chronic condition you need your meds. For the field of ENT, ultimately that may mean that moms who believe their kids’ ears needs drains would pay for it, as should the 90% of parents who insist on prescriptions for antibiotics for viral infections. Mr. Knowlton would prefer payers to use copays and deductibles rationally, with lower rather than higher out-of-pocket expenses to keep chronic and life-threatening conditions in check. (For information on referring patients, go to www.healthwellfoundation.org .)

Despite the unsustainable cost of Medicare insuring 50-to-64-year-olds, the consequences of leaving them unprotected weigh heavily on physicians. Dr. Har-El, who has seen his share of patients who are smokers, who have been hoarse for five months and cannot swallow or breathe properly, but who didn’t get diagnosed because they didn’t have health insurance, said that medicine has failed the uninsured. Our problem is the people who aren’t poor enough for Medicaid, don’t have a regular workplace, own their own business, and have to choose between health care and feeding their families. For him, when previously uninsured patients get their Medicare cards it’s like a poor person getting a windfall check and going on a shopping spree. Balancing the ballooning US health care bill against providing care for all who need it remains a tough challenge.

AARP: Filling the Gap?

AARP started selling insurance to retirees eight years before Medicare existed. Until the establishment of Medicare, retirees or their employers funded their health care.

AARP is again taking the lead on health insurance. On January 1, 2008, AARP-in partnership with UnitedHealth Group and Aetna-will offer health plans for those ages 50 through 64, the underinsured, and seven million uninsured. In addition to covering medical care, the plan will offer wellness, prevention, and treatment of depression programs. AARP plans to track plan outcomes and to reward or penalize the carrier based on performance.

AARP will also offer Health Aid-a 24/7 information and referral service for everything from healthy living to finding a caregiver. For Medicare recipients, it will offer a new Medicare Advantage plan, a managed care option that is an alternative to Medicare parts A and B, and offers enhanced Medicare benefits.